Woolworths has reported 20.6% sales growth in its beauty segment for the 18-weeks ending in November despite port congestion and product availability challenges that plagued the group earlier in the year.
The surge in beauty sales comes on the back of Woolworths’ strategic expansion, including the opening of its first stand-alone Beauty store at Waterstone Village in Somerset West in September.
According to the group, beauty and fashion represent its largest opportunities to reset the overall value of the business, with the focus on driving deeper market penetration and improving financial health across its Fashion, Beauty, and Home (FBH) division.
Woolworths previously announced its intension to invest heavily in this division, with plans to double the size of its beauty business.
The group said it is working to improve product availability and optimise the balance between physical and online retail. This includes a R1bn investment set aside for upgrading its value chain, systems and logistics, which the group believes will strengthen its operational capabilities and boost growth.
Despite the challenges faced in the first half of the year, including competition from low-cost online retailers, Woolworths remains confident in its strategy.
“The division has reduced its reliance on promotions and markdowns to selling more at full price and is expected to recover from such constraints in the near term,” Woolworths group CEO Roy Bagattini said.
“The proliferation of low-cost online retailers into the SA marketplace has had significant impacts on the retail landscape, driven in part by a lack of regulatory oversight. It is undeniable that the ease with which they were able to access the market highlights local weaknesses and certainly provides an opportunity to learn and grow.”
The group reported higher 18-week sales as consumer sentiment improves in SA.
Turnover and concession sales for the 18 weeks ended November 3 increased by 6.5% and 6.8% on a constant currency basis, the group said.
It noted that while discretionary spend remained relatively constrained in SA, consumer sentiment was improving, supported by moderating inflation, the start of easing interest rates and the suspension of load-shedding.
In Australia, however, the sustained effect of high interest rates and elevated living costs continued to weigh on both retail footfall and spend.
Woolworths’ food business delivered turnover and concession sales growth of 12.1% and 7.3% on a comparable-store basis. That was driven by positive underlying volume growth on improved availability, ongoing innovation and its enhanced overall value proposition.
Excluding Absolute Pets, which was acquired in the fourth quarter of the previous financial year, food sales increased 9.6%.
Price inflation for the period averaged 6.2% with trading space, excluding Absolute Pets, increasing 2% on the previous period.
Online sales increased 36.9%, contributing 6.2% of food sales, driven by the group’s on-demand offering, Woolies Dash, which delivered sales growth of 54.4%.
The first 18 weeks of sales include the fashion winter clearance, which constitutes a high proportion of the trade for the period.
In the Country Road Group (CRG) division, trading conditions in Australia and New Zealand continue to prove more challenging than anticipated, with the retail sector facing further declines in footfall, intense promotional activity and the shift of spend towards value brands.
CRG sales declined 8.8% for the period and by 13.8% on a comparable-store basis. Trading space decreased 1.6% while online sales contributed 26.6% of total sales.
Update: November 11 2024
This story has been updated with new information.
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